Prudential Financial Inc., the No. 2 U.S. life insurer, is contesting a U.S. finding that it poses a potential risk to the financial system, becoming the first company to challenge the tag that brings additional oversight.
Prudential requested a hearing to explain why it shouldn't be considered a systemically important financial institution, or SIFI, the Newark, New Jersey-based company said today in a regulatory filing.
Chief Executive Officer John Strangfeld is pursuing a different course than the leaders of American International Group Inc. and General Electric Co.'s finance unit, which each said today they won't contest SIFI status. The three companies said June 3 there were identified by the Treasury Department's Financial Stability Oversight Council as potential risks to the economy. They were given until July 3 to appeal.
"If the company is designated by the council as a covered company, it could be subject to stricter prudential standards under the Dodd-Frank Act, which may include requirements regarding risk-based capital and leverage, liquidity, stress-testing, overall risk management," the insurer said in the filing.
The council has 30 days to schedule a hearing, Prudential said, citing U.S. regulations.
"We will continue to work closely with regulators to demonstrate our belief that the company does not meet the requirements of the SIFI designation," Scot Hoffman, a spokesman for the insurer, said in an e-mailed statement.